Schizophrenia (Sz) is associated with deficits in cognitive function that represent a core feature of the disorder. Recent neurochemical (glutamatergic) models of Sz predict widespread dysfunction across subcortical and cortical sensory regions, contributing to higher order dysfunction. Over the past project period, we have documented deficits in early auditory and visual processing in Sz using behavioral-, event-related potential (ERP) and MRI-based approaches. In addition, we have demonstrated significant contributions of subcortical/cortical sensory processing deficits to higher order cortical impairments. This project utilizes a combined ERP/fMRI approach to investigate neural mechanisms linking deficits in subcortical and early cortical processing in Sz to impaired higher order function, including impaired social cognition. In the auditory system, deficits include impaired ability to match tones following brief delay, as well as impaired generation of NMDA-related auditory ERP including mismatch negativity (MMN) auditory steady-state (ASSR) responses. Moreover, deficits in low level auditory processing contribute to higher order dysfunction, such as impaired auditory emotion recognition (AER) and prosodic detection, which, in turn, contribute to impaired social and occupational function. In the visual system, deficits include reduced contrast sensitivity particularly to low contrast, low spatial frequency (LSF) stimuli that preferentially engage the magnocellular visual system, as well as impaired generation of steady state visual evoked potentials (ssVEP), visual P1, and impaired fMRI activation of magnocellular-recipient regions of primary visual cortex. Low level deficits contribute to higher order impairments including face emotion recognition (FER) and visual scanning/eye movement regulation. Finally, both auditory and visual deficits correlate with impaired functional connectivity within low-level sensory regions and between sensory and higher cognitive regions (rsFC), as assessed using resting state fMRI. Starting in the past cycle, we increasingly incorporated frequency-domain and oscillatory hierarchical approaches to our auditory/visual neurophysiological analyses, and developed methods for simultaneous eye tracking and natural scene processing, including use of fixation-related potentials (FRP). We also explored patterns of dysfunction within clinical high risk (CHR) individuals and their contribution to both current function and ability to differentiate individuals who convert to Sz (CHR+) vs. those who do not (CHR-). Finally, we evaluated effects of non-invasive brain stimulation techniques including Transcranial Magnetic Stimulation (rTMS) and transcranial Direct Current Stimulation (tDCS) on early-stage sensory processing. For the upcoming project period, we will further characterize dysfunction within subcortical regions such as lateral/medial geniculate nucleus (LGN/MGN), inferior/superior colliculus (IC/SC) and pulvinar (PulN) which we observed in our recently completed studies along with sensory cortex, and will examine contribution of these deficits to higher order impairments such as social cognition and theory of mind (ToM) in Sz.